Short-Term TSLA Price Movements - 2016

[Julian Cox]

This is my conclusion too - I expect the stock to soar on the MIII unveiling and pre-orders.

I would temper that a bit and say that the stock will soar from here on out in anticipation of the Model 3 unveiling in conjunction with alleviation of Model X concerns. Then you can just about guarantee a bear attack surrounding the unveiling itself (which is why I said exactly 1 month that would bring us to March 26th not March 31st). Then I would expect the stock to soar again on reservations (pre-orders) until Q3 before the real Model 3 spending cycle starts in Q4.

Your time horizon may be different. Mine is Q3 for max gains. I don't know how effective a bear attack will be surrounding the Model 3 unveil but I suspect the best risk reward profile of a position bought recently at $145 would be to take profits prior to the unveil and re-enter regardless of what happens to the SP within a couple of weeks after. Maybe you catch another dip, maybe you don't.

 

[AlMc]

MAx pain to start the day about $180 for those that follow it.

 

[dreamingof3]

Good Morning all-so glad we are seeing a much deserved bounce into March. Just last Friday, irritated, I contemplated selling. The price was touching 164. Just one short week later we are flirting with 190. The saying is true- What a difference a day makes. The story seems to have shifted away from negativity and inability to make the X to- OMG the 3 is actually going to be unveiled at the end of March. It's like the market was doubting the 3 existed. Is it possible the shorts still didn't believe the 3 alpha and beta were completed?

 

[Zaxxon]

They're not completed. They're 'probable of completion' as of 12/31.

 

[dreamingof3]

They're not completed. They're 'probable of completion' as of 12/31.

Work with me here-probable of completion as of 12/31/2015. What does that mean? Likely done as of end of last December?

 

[Yggdrasill]

I'm out of the red now.

Also, I'm on vacation in New York, and I have to say my fears of Tesla reaching saturation in the market is greatly alleviated. I've been walking around the city for two days and I still haven't seen a single Tesla. If this were Norway, I would have seen at least five before leaving the airport and maybe ten per hour of walking around.

 

[Zaxxon]

Likely to be completed at some point. Not completed as of 12/31. I'm not disagreeing with your ultimate premise: they're coming. But let's not get ahead of ourselves.

 

[Bgarret]

I'm out of the red now.

Also, I'm on vacation in New York, and I have to say my fears of Tesla reaching saturation in the market is greatly alleviated. I've been walking around the city for two days and I still haven't seen a single Tesla. If this were Norway, I would have seen at least five before leaving the airport and maybe ten per hour of walking around.

Living in New York, I would tend to agree, but if you really want to see how un-saturated the U.S. Market is, go to the Midwest (although that is slowly changing). I did test drive the X on Wednesday in Manhattan and then went back to my neighborhood in Brooklyn and my kids immediately saw 3 Model S's parked in 3 blocks...first time I'd seen more than one in the neighborhood in the last 2 years.

Norway and California are outliers....or are the crystal balls into the future??? Hmmmm.

 

[sunhelm]

Yeah this is a common question. I believe incremental solar can easily supply this energy. Let's do a little math.

An EV is driven about 40 miles per day and needs about 10 kWh. One kW of solar produces about 3 to 4 kWh on an average day. Thus, about 3 kW of solar is sufficient to power one EV.

Now 1 mb/d oil is offset by 25 M EVs powered by 75 M kW = 75 GW of solar.

Let's suppose we sell 25 M EVs in 2025. Will there be enough solar installed to handle this? Last year 57 GW was installed worldwide, and this has been growing at 30% per year for decades. Continuing at that pace leads to 786 GW installed in 2025. Thus solar can supply more than 10 times the power needed for EVs.

One wonders in that scenario how can the global grid accomodate that much solar power? Well for perspective global generation capacity today is about 6000 GW. By 2025 capacity could be twice that so 750 GW need not be too far out of scale. But specifically to accommodate the daily harvest of solar power, I believe daytime charging will become widespread. So I envision alot of work site charging infrastructure. Negative wholesale prices at midday will become quite common. So grid operators will offer daytime charging to balance the grid at super low prices. When 25 million new EVs are rolling onto the road each year, this won't seem surprising at all. This sort of infrastructural will emerge not because people lack the ability to charge overnight or because EV drivers are willing to pay for lots of charging, but because it creates enormous value for the grid to cheaply tap into batteries to balance the grid. So this is why I don't worry about charging infrastructure. This is also one reason why future EV owners should want to saturate the grid with renewables. An extreme duck curve is a huge opportunity for EVs.

Thanks. I am following your math but your 250 wh/mi estimate seems a bit low. I'd say 350 wh/mi is probably a more real world estimate, so about 14 kwh needed per EV per day. Power needed from panels per day would be 5 kw. At 25M EVs, it would then need 125 GW of solar per day, still well within your projected solar power capacity of 786 GW by 2025.

Regarding the duck curve, with the advent of battery power storage, that will probably level out throughout the 24 hour cycle, probably negating the incentive for midday charging.

So what do you think the oil companies will do to the glut in the oil supply? I would think they would come up with new ideas on why we would still need to suck on its greasy teat (pardon the imagery).

 

[jhm]

I wonder to what extent the Bloomberg work on the rise of electric vehicles is impacting investors. The piece changes the narrative in at least two important ways.

First, EV are inevitable technology likely to reach 50 million vehicles within 8 to 13 years. Investors who take in this narrative will naturally start to think about which investments are best positioned to benefit from this trend. Naturally Tesla will loom large on this short list.

Second, the impact of 50 million EVs is enough to put the oil industry into an extended glut and displace oil demand forever. This narrative allows investors to disconnect the oil and EV markets. The conventional thinking has been that cheap oil eliminates demand for electric vehicles, but this new narrative reverses that to say that increasingly less expensive EVs will displace demand for oil. As this happens, oil will become cheap because it is losing marketshare. So the value of Tesla and oil will be inversely related in the long run.

So both of these narrative shifts are critical for Tesla to get a fresh appraisal from the market. As some investors turn away from oil investments, others will turn toward Tesla for the purest play in the emerging EV market. So while Tesla's stock price has been crushed by declining oil prices over the last 18 months, this new narrative explains why things will be quite different going forward.

Usually, this long-term perspective has little day to day relevance for trading TSLA, but Bloomberg is injecting this corrective narrative right now. So we should watch how other media outlets pick up on it. So far the conventional oil investment site oilprice.com has ignored it. That would be the first line of defense from those who are vested in the old narrative. When such sites attempt to discredit the new narrative, we will know that serious progress in shifting the narrative has taken place. I can hardly wait.

 

[sunhelm]

Previously they took down nearly 300 from the website. Perhaps they presented all three hundred to a wholesaler or a fleet operator or an auction and re-listed the balance after a hundred were sold.

Looking at the listing, these seem to be completely new inventory so more likely wiping out their current Store inventory models for sale (a lot have very low mileage) (at about 100 stores, at 3 cars per store gives you the 300 additional cars as CPO). What this means to me is they are probably making room for at least 2 Model X's in the showroom and maybe a refreshed Model S on 3/31 when model 3 buyers line up at the store and get treated to new sights!

 

[Julian Cox]

Looking at the listing, these seem to be completely new inventory so more likely wiping out their current Store inventory models for sale (a lot have very low mileage) (at about 100 stores, at 3 cars per store gives you the 300 additional cars as CPO). What this means to me is they are probably making room for at least 2 Model X's in the showroom and maybe a refreshed Model S on 3/31 when model 3 buyers line up at the store and get treated to new sights!

You're probably right. Not that I think any of this is fundamental to the current stock price trajectory but I would imagine a Model S refresh is to be expected at some point. For example a more Model X like nose cone, maybe some optional content like self-presenting doors, maybe address some things regarding rear passenger ventilation, center console, in-door storage, rear cup holders etc. Personally I don't like the creases along the front hood and I don't like the silver trim along the bottom of the doors especially in white painted Model S because it pulls to door line visually into the sill. The latter has already been a addressed in the Model X and could easily be addressed in an S refresh even if it was just a matter of installing a black trim strip rather than a chrome one in that location.

 

[Tslynk67]

I would temper that a bit and say that the stock will soar from here on out in anticipation of the Model 3 unveiling in conjunction with alleviation of Model X concerns. Then you can just about guarantee a bear attack surrounding the unveiling itself (which is why I said exactly 1 month that would bring us to March 26th not March 31st). Then I would expect the stock to soar again on reservations (pre-orders) until Q3 before the real Model 3 spending cycle starts in Q4.

Your time horizon may be different. Mine is Q3 for max gains. I don't know how effective a bear attack will be surrounding the Model 3 unveil but I suspect the best risk reward profile of a position bought recently at $145 would be to take profits prior to the unveil and re-enter regardless of what happens to the SP within a couple of weeks after. Maybe you catch another dip, maybe you don't.

It's good, logical thinking - of course reality doesn't always pay attention to logic though.

In fact I will need the money at some point to invest in some real-estate, just seemed a perfect opportunity to jump onto TSLA when it seemed so low and with so much promise in the short-term.

So I'll see for the timing. In any case, I intent to purchase more later in the year and go long with those.

 

[sunhelm]

I wonder to what extent the Bloomberg work on the rise of electric vehicles is impacting investors. The piece changes the narrative in at least two important ways.

First, EV are inevitable technology likely to reach 50 million vehicles within 8 to 13 years. Investors who take in this narrative will naturally start to think about which investments are best positioned to benefit from this trend. Naturally Tesla will loom large on this short list.

Second, the impact of 50 million EVs is enough to put the oil industry into an extended glut and displace oil demand forever. This narrative allows investors to disconnect the oil and EV markets. The conventional thinking has been that cheap oil eliminates demand for electric vehicles, but this new narrative reverses that to say that increasingly less expensive EVs will displace demand for oil. As this happens, oil will become cheap because it is losing marketshare. So the value of Tesla and oil will be inversely related in the long run.

So both of these narrative shifts are critical for Tesla to get a fresh appraisal from the market. As some investors turn away from oil investments, others will turn toward Tesla for the purest play in the emerging EV market. So while Tesla's stock price has been crushed by declining oil prices over the last 18 months, this new narrative explains why things will be quite different going forward.

Usually, this long-term perspective has little day to day relevance for trading TSLA, but Bloomberg is injecting this corrective narrative right now. So we should watch how other media outlets pick up on it. So far the conventional oil investment site oilprice.com has ignored it. That would be the first line of defense from those who are vested in the old narrative. When such sites attempt to discredit the new narrative, we will know that serious progress in shifting the narrative has taken place. I can hardly wait.

I like your take on this. Little by little, like water drip that slowly, surely melt rocks creating towering stalactites or carving canyons over time, so would be the unraveling of TSLA from the oil market.

 

[jhm]

Thanks. I am following your math but your 250 wh/mi estimate seems a bit low. I'd say 350 wh/mi is probably a more real world estimate, so about 14 kwh needed per EV per day. Power needed from panels per day would be 5 kw. At 25M EVs, it would then need 125 GW of solar per day, still well within your projected solar power capacity of 786 GW by 2025.

Regarding the duck curve, with the advent of battery power storage, that will probably level out throughout the 24 hour cycle, probably negating the incentive for midday charging.

So what do you think the oil companies will do to the glut in the oil supply? I would think they would come up with new ideas on why we would still need to suck on its greasy teat (pardon the imagery).

You got it. A result like this should be robust changing assumptions as you have shown. A more subtle point is that a Model S displaces more oil per mile than a LEAF does. One is displacing a large luxury sedan with low MPG while the other is displacing a small fuel efficient car with high mpg. So for maximal oil displacement it is best of EVs to target the least fuel efficient segments first. High performance, trucks, and SUVs should top the list.

Note that the whole dispacement argument is based on 1000 miles per barrel or about 25 miles per gallon. If EV makers targeted displacing vehicles with an average of 20 mpg, that would be a 800 miles per barrel. Thus, you would need 20 million EVs to displace 1 mb/d of oil. This shortens the time it takes to disrupt the oil industry by about 6 months. However, displacing low MPG vehicles requires more kWh per vehicle, so from a battery supply point of view, you run into the same constraint. Essentially, it's the GWh of batteries time on the road times cycle frequency that displaces the oil not the count of vehicles.

Regarding my cheap midday charging hypothesis, there is an economic argument for charging EVs directly from excess solar (and wind) rather than bumping that excess into stationary batteries so that EVs are charging in the evening drawing down stationary batteries. So I certainly expect the grid to have lots of storage in ten years, but it is best not to charge any batteries from stored energy. So the logistical opportunities are midday charging for surplus solar and early morning charging from surplus wind. The latter is easily done with overnight charging at home, but the former may require additional charging infrastructure. So the question for the utilities will be whether it is cheaper to set out a little charging infrastructure to tap into dispatchable EV load or to buy dedicated batteries. Granted utilities have incentives that do not always lead them to do the most economical thing, but there are multiple pathways to midday fleet charging whether the utilities lead on it or not. For example, a third party could build out and operate the infrastructure and participate in the wholesale electricity market as a wholesale buyer of power.

The oil industry is simply going to have to change its expectation about future demand. As the price of batteries along with solar and wind decline, this will put a cap on the value of a barrel of oil. I am currently working on some metrics for this, and my rough impression is that a barrel of oil may only be worth around $20 in 2020 compared with a combination of batteries and solar energy. I'll share the details as my ideas crystalize, but the essential idea is that batteries plus cheap electricity are a substitute for oil, and this implies a declining price cap. This is very critical for oil investors to understand. If a particular oil play requires oil prices in excess of this substitution value of oil, it is an extremely risky play. Just ask Kodak how much film was worth. The industry can deny and spin all they want, but it is their investment to lose.

 

[Noble Ninja]

An Indiana Senate committee was poised to vote on a measure banning automobile manufacturers from selling directly to consumers but backed down amid backlash'

http://finance.yahoo.com/news/indiana-backs-down-banning-tesla-221938696.html

REGARDS DEFEAT OF CORRUPTION IN INDIANA - THIS IS FALSE POSITIVE NEWS! THE CORRUPT BILL HAS BEEN PASSED THERE.

I have just looked at the second video. All Indiana have done is stripped out an amendment that gave Tesla some breathing room and restored the Anti-Tesla bill to its full force. Passed it unanimously and turned it over to their legislature to turn it into law.

The USA Today article's wording makes it sound like the Indiana Senate committee is merely delaying a final decision:
"Buck and the bill's author, Rep. Kevin Mahan, agreed to put the issue before a study committee. ​That means the legislature won't consider a ban on direct auto sales until at least next year."

http://www.usatoday.com/story/money/cars/2016/02/26/indiana-allows-tesla-keep-selling-its-electric-cars/80969796/

 

[The Blue Owl]

The USA Today article's wording makes it sound like the Indiana Senate committee is merely delaying a final decision:
"Buck and the bill's author, Rep. Kevin Mahan, agreed to put the issue before a study committee. ​That means the legislature won't consider a ban on direct auto sales until at least next year."

http://www.usatoday.com/story/money/cars/2016/02/26/indiana-allows-tesla-keep-selling-its-electric-cars/80969796/

If anyone wants to see what the Indiana legislators really think about the issue, watch the statement of the bill's author (it's only a few minutes). This is how a politician speaks. This is what Tesla must counter. The only way they can do it is by mobilizing the grassroots, Uber-style.

 

[Julian Cox]

Indiana allows Tesla to keep selling its electric cars

This kind of coverage regards Tesla vs Dealerships in Indiana is encouraging-looking but it is misleading. The anti-Tesla bill was stripped of an amendment that was intended to soften the blow to Tesla and was passed to the legislature in full force.

There is an opportunity to fight it becoming an anti-Tesla law in the State of Indiana but make no mistake, the anti-Tesla bill that would reward Dealers with rights to a slice of Tesla's business in the State for nothing but benefit to dealers and competitors at Tesla and the Consumer's total cost has passed the House in Indiana. I.E. a total victory at this stage in proceedings for crony capitalism, bought politicians and corruption. Not an opportunity to celebrate or relax.

This is the same that happened in New Jersey, where in that case the corruption was passed by the Governor and eventually thwarted in the legislature. This has not been thwarted by the Indiana legislature yet and it will be a battle to ensure that it is.

They key point here in my opinion is that the entire discourse was conducted on the wrong footing and was not challenged effectively by Tesla's General Counsel Chen.

It is irrelevant to the Indiana Senate that Tesla needs to cut out the middleman to make a profit. Arguing for that which Chen basically did (regardless of the fact that he and others also made some good points too) deserves exactly the response Tesla got: Sure so would everyone else but they can't so why should Tesla and a bunch of Chinese that might follow your example have that special advantage against GM and others that play by the rules? Sounds fair right? That is how Tesla lost in Indiana.

GM can set up a wholly owned dealership in Indiana under Indiana State law as it currently stands - as long as its zoning does not compete with its existing independent dealerships. Obviously if GM tried to do that the independent dealers would argue that there is no zone far enough away from one of their locations where such a dealership would not end up competing unfairly for their business and they would be right about that. Tesla has a Dealer license in Indiana under the same law and of course they can prove that its zoning in no way interferes with the business an existing Independent Tesla Dealer Franchisee because there are none in Indiana nor anywhere else. There is no loophole and no exploitation on Tesla's part and there is definitely no argument that Tesla's operations is harmful to consumers in the form of dumping product on the market with nobody to take care of after-sales service which in Tesla's case, in Indiana, is running at a 99% satisfaction rate, vastly improving upon satisfaction levels typical for Franchised Dealer-based service in the State of Indiana or anywhere else. The current pre-HB1254 law in Indiana is working exactly as it should to protect a dealer's investment in the consumer market for a vehicle brand from unfair exploitation by that brand's OEM. In the case of Tesla the entire discourse SHOULD have been about defending consumers and Tesla's own investment in the consumer market for its own vehicle brand (in terms of marketing, sales and service) from unfair exploitation and anti-competitive practices by Franchised Dealers and their OEM's, remembering that the parties arguing for restrictions on Tesla's business are exactly those exploitative parties that State Franchised Dealer Laws were designed to defend smaller and more vulnerable businesses from: Namely GM and Ford. To forget that is to forget who the aggressor is and always has been in these matters.

Such a discourse mandates that the Anti-Tesla bill be defeated. Tesla did not argue this case. Had it done so Tesla would have won the argument convincingly. Whether Charmian Buck and Senators of the Indiana Senate or its legislature would be amenable to the inherent justice of this argument remains to be seen.

- - - Updated - - -

Wow, we got another day-trader's morning dip, afternoon rally. Anyone think we'll see $200 before end of play? I think there's a chance.

 

[RobStark]

I don't see what the confusion of Indiana Bill HB1254.

It has been effectively tabled for this session by moving it to a summer study committee.

It can be revived at the next session.

That is how legislation works.

Tesla now needs to pay lobbyist in virtually all State Capitals to be aware of legislative moves against Tesla or try to pass laws to reverse the status quo and allow direct sales.

That is how GM can most effectively compete against Tesla. Not with better cars or service.

 

[Gerardf]

Almost last day of February, just one more trading day to go after today, and we are almost back to where we started the first days of February.

If we can do the same in March and bring the share price on March 30 back to where it was on January 1st... That would make a great base-level for the Model-3 reveal

As long as macro does not spoil things, I feel that might be possible.